Business Plan Essentials | Business owners, top management, and VCs weigh in on what makes a solid business plan that will attract funding.
A business plan is essential whether you’re just getting started and looking for startup finance or you’re already up and running but looking to expand and raise capital. A business plan is not only necessary if you want to attract investors, but it may also serve to clarify your vision for the company’s future by outlining its mission, goals, and values.
However, a business plan cannot simply be a bulleted list of an entrepreneur’s ideas, speculations, and goals if it is to be successful.
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1. Summary of the Executive Summary
Your executive summary should be discussed in the two minutes you have with a potential investor on an escalator. Questions like, “What is your company’s mission?” should be answered here. To what end does this matter to you? Please explain how your business plans to generate money off of this endeavor. Tell me about your history of success. Simply put, how much do you need? If I lend you this money, what type of interest can I anticipate receiving? Why?
2. Description of the company or item
The investor will want additional information if you have more than two minutes. You should outline your company’s goals and give the specifics of the product you have in mind to accomplish those goals in the business/product description. In this description, you should also highlight the features that set your product apart from the competition.
3. Audience intended
In this section, you’ll explain exactly who it is that your business intends to attract. Explains the market’s selection criteria, revenue and growth, growth drivers, and typical net profit margins. In my opinion, the findings from your consumer interviews should also be presented here.
4. Plan to increase your market share.
In this section, you will outline the most important criteria a potential client considers while choosing between several service providers, in order of significance. It will also detail how those consumers rate the performance of competitors across a range of metrics. Next, it’ll go over the ways in which your product excels when others fall short. The final section will detail your company’s strategy to increase its market share by meeting certain market share targets.
5. Staff of Management
In this part, you’ll introduce the people who make up your team. If you’re trying to attract investors without any business expertise under your belt, you’ll need to demonstrate that you and your team have what it takes by highlighting your academic, athletic, and extracurricular successes.
6. Foresight of Funds
For an investor, this is the part that seems the least plausible. Investors care most about whether or not you made a thorough estimate of the amount of money you’ll need to accomplish your goals and the amount of money you’ll make as a result of that investment. The idea is to make reasonable assumptions and anticipate questioning from investors regarding your decision-making and data sources.\
7. Budget Predictions
Explain how your finance approach helps your growth. Include a break-even analysis showing risk as fixed vs. variable costs. Cash flow, balance sheets, and profit/loss projections.
Remember that these typical sections are your strategy, not a class assignment, so ignore anything that doesn’t fit. If you’re writing a business plan for internal use only, you don’t need to include your company history. You should disclose management team gaps and a personnel plan, but not the backgrounds of your senior management team members.
You may need to customize your plan by adding items. A plan for investors should contain the investment offering—how much equity for how much money—exit strategy, usage of cash, and return on investment. A bank loan application plan must include loan conditions, collateral, intended use, and payback arrangements.